Alcoa Kicks Off 3Q Earnings Season to the Upside

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Published October 09, 2012

| FOXBusiness

Aluminum maker Alcoa (AA) kicked off earnings season on Tuesday on a somewhat optimistic note, disclosing a surprise adjusted profit despite plunging aluminum prices.

Despite the earnings beat, Alcoa swung to a net loss in the third quarter and slashed its forecast for full-year aluminum demand, underscoring the sluggish global economy.

Still, shares of the Pittsburgh-based company ticked up about 1% on the stronger-than-expected results.

Alcoa said it lost $143 million, or 13 cents a share, last quarter, compared with a profit of $172 million, or 15 cents a share, a year earlier. Excluding one-time items, it earned 3 cents a share, besting forecasts from analysts for a breakeven quarter.

Revenue dropped 9% year-over-year to $5.8 billion, topping the Street’s view of $5.54 billion.

Like most materials companies, Alcoa is very sensitive to commodities prices. The company has struggled to grapple with shrinking realized aluminum prices, which it said tumbled 17% year-over-year and 5% sequentially.

“Markets seem to be driven more by headlines than fundamentals right now, but Alcoa remains focused on the things within our control”, CEO Klaus Kleinfeld said in a statement. “We’re capitalizing on pockets of strong growth and achieving record profitability in our mid and downstream businesses.”

Underscoring the tough environment, Alcoa cut its 2012 global aluminum demand forecast to 6% from 7%, citing the ongoing “slowdown” in China, which is the world’s No. 2 economy.

Alcoa’s report comes as investors are bracing for a potentially difficult earnings season amid the slowing global economy.

According to S&P Capital IQ, analysts are projecting S&P 500 earnings will dip nearly 2% year-over-year this earnings season, the first such contraction since the aftermath of the Great Recession in the third quarter of 2009.

Alcoa is traditionally the first blue-chip company to report earnings each season and will be followed later this month by the likes of J.P. Morgan Chase (JPM) and General Electric (GE). 

Shares of Alcoa gained 0.88% to $9.21 in after-hours action. The company’s shares inched up 0.11% to $9.13 during regular trading on Tuesday, easily outperforming a 0.99% selloff on the S&P 500.

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